In real estate, one of the factors that an investor looks at before making an investment is growth indicators. These are metrics that are used to determine how well a company or an industry is doing and whether or not they're showing positive potential.
The most common types of growth indicators used in the real estate industry are:
1. Construction Spending
The U.S. Census Bureau issues a monthly report that shows all new domestic construction expenditures each month. It provides the prior month’s data and the previous year’s activity for the same month. The report also shows a breakdown by residential and non-residential spending, as well as by private and public spending.
2. Residential Construction
The U.S. Census Bureau also releases a report on new residential construction covering the number of new permits issued and houses that builders have just started to work on.
3. New Home Sales
Another report that the U.S. Census Bureau issues are about the new residential sales. This report shows current national and regional statistics on starts, completions, and characteristics of new, privately-owned single-family and multifamily housing units and on sales of new single-family houses.
It also shows national data on median and average prices, the number of houses sold and for sale by stage of construction, and other statistics.
4. Existing Home Sales
The National Association of Realtors (NAR) tracks the number of existing homes sold every month and compiles it in a report. It is based on actual home sale closings and provides data about the inventory, prices, and regional sales performance.
The report provides valuable information that can help you make informed decisions about the real estate market like pricing trends and which areas might be best for investment.
5. Pending Sales
The National Association of Realtors (NAR) produces a pending home sales data monthly report, which provides information on the number of purchase contracts signed by buyers of existing homes. It also provides a breakdown of monthly sales activity by region and compares that to sales activity in the previous month and year. The report gives a good idea of how housing sales are likely to be in upcoming periods.
6. Housing Market Index
The National Association of Home Builders (NAHB) publishes a monthly NAHB/Wells Fargo Housing Market Index (HMI) that uses builder sentiment to gauge the health of the single-family home market. The survey asks builders about their current level of sales and buyer traffic as well as their sales expectations for the upcoming six months.
7. Regional Price Indices
There are three major home price indices that are released regularly. The first is produced by Standard & Poor’s which looks at national trends as well as prices in certain metropolitan areas. Another one is the Federal Housing Finance Agency’s Home Price Index (HPI), which uses input from Fannie Mae and Freddie Mac to track single-family home prices. Finally, there is CoreLogic, Inc.’s version of a home price index, which looks at nationwide prices and also takes into account the impact of distressed sales.